How To Negotiate A Mutually Beneficial Agreement

How To Negotiate A Mutually Beneficial Agreement

What does it take to create a deal that works for both sides?
What does it take to create a deal that works for both sides?
Image Credit: n0cturne

We’ve all heard about mutually beneficial agreements, but can anyone say just exactly what they are? By one definition, a mutually beneficial agreement occurs when both sides of the table attempt to use their negotiation styles and negotiating techniques to grab as much as they possibly can from the limited amount of items that are being negotiated. I think that a much better definition has to do with taking the time to create more value during a negotiation and then making sure that everyone is taken care of in the final deal. Great words, but just exactly how does one go about doing this?

The Power Of Sharing

So why do we so often struggle to find a way to reach a mutually beneficial agreement with the other side? I believe that it is because we bring a win-lose mindset to the negotiation table. The reason that we do this is because a lot of how we tackle a negotiation may have been formed by all of the deals and disputes in which we had no choice but to haggle over just one issue – generally price. In these types of negotiations we can have trouble finding ways to expand the conversation and bring other issues to the table.

Due to the issues that we’ve run into in negotiations that we may have been involved in previously, when we show up at a negotiation we may not be in the mood to share with the other side. Negotiators often fear they will give away too much if we express our true preferences on various issues. What we need to understand is that expressing preferences isn’t the same as giving away our bottom line. As an example of sharing, you could tell the other side that you had had issues with poor service when dealing with your previous supplier. You’d want them to know that because of that, now service had become a critical issue to you. This is the time that you could ask the other side what their key concerns regarding service would be.

You Need To Ask Questions

Although all too often it may seem as though the only issue that needs to be discussed as a part of a negotiation is price, it turns out that many more issues beyond price are often involved. When negotiating a deal, for example, you and the other side might talk about not only price, but also financing, delivery, possible future business deals, service, performance bonuses, and so on.

In order to introduce additional items into a negotiation, you are going to have to ask the other side some questions. You need to not make the mistake of viewing the additional complexity associated with having more items to negotiate as a liability. It turns out that the opposite is true. When multiple issues are on the negotiation table, you will gain the ability to brainstorm mutually beneficial tradeoffs with the other side. By using tradeoffs, you can achieve more than you would have if you had simply compromised on each issue. This allows you to increase your odds of reaching a mutually beneficial agreement.

By asking questions you can avoid the common mistake of viewing negotiation as primarily an exercise in trying to persuade the other side to do what you want them to do. If you allow yourself to have that mindset, you will end up being so focused on what you want to say that you won’t listen closely enough to what the other side has to say. By contrast, listening actively and asking lots of questions will help you collect the information you need to develop a mutually beneficial agreement for both sides.

Multiple Offers Need To Be Made

All too often we tend to negotiate like we think. What this means is that we’ll present the other side with one proposal, see how they react, and then go back and present them with another proposal. The problem with this approach is that it’s going to take a very long time to come up with a mutually beneficial agreement. Both sides are going to get worn down by this process and we’ll both be less inclined to agree to a valid proposal when it finally shows up.

We need to become aware that business negotiators tend to present one offer at a time. If the offer is rejected, we learn very little new information that would help us to move forward. Instead of doing this, a better approach is to craft three offers that are different across issues but equally appealing to you. The other party may reject all three of the offers, but is likely to communicate which one she likes best—and this will put you back on a track toward a mutually beneficial agreement.

What All Of This Means For You

Although all of us have probably heard about mutually beneficial agreements, it can often be difficult to nail down just exactly one of these is. In order to create a principled negotiation result that meets this criteria, we’re going to have to find ways to bring more value to the table. This is not easy to do if you don’t know how to go about doing it.

Negotiators need to learn how to share more in their negotiations. Simply expressing a preference for something will not reveal too much to the other side. We need to understand that our role as negotiators is not to simply convince the other side to do what we want them to do. Instead, we want to find common ground between us that we can both agree to. In order to discover what will work, we are going to have to take the time to ask the other side questions in order to uncover more information. Instead of wearing down the other side by presenting offer after offer and having them be rejected, we need to present the other side with multiple simultaneous offers and then evaluate their response to each one of them.

The best negotiations are the ones that are able to end with a deal being reached that both sides feel that they can live with. The best kind of deals are mutually beneficial agreements that provide value to both sides. In order to create these types of agreements, we need to expand our negotiating skills. Create a mutually beneficial agreement the next time you are in a negotiation and discover what a good deal for both sides looks like!

– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Negotiating Skills™

Question For You: How can you make the other side view an offer as being a mutually beneficial agreement?

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What We’ll Be Talking About Next Time

The reason that we are willing to invest the time in a negotiation is because we believe that by using our negotiation styles and negotiating techniques we’ll be able to eventually reach a deal with the other side. However, in order to make that happen, at some point in time the negotiations have to come to an end. We need to close them down. In the movie Glengarry Glen Ross Alec Baldwin’s character tells his employees “ABC: Always Be Closing”. This is not a good idea – it’s a bit cutthroat and it means that you have to ignore the other side’s needs. What’s the right way to wrap up a negotiation?

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